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Glossary

Multisignature

November 21, 2023 - Around 2 mins mins to read

Understanding Multisignature: A Comprehensive Guide

When it comes to transferring funds from your wallet, the creation and signing of a transaction play a crucial role. By digitally signing the transaction, you confirm your ownership of the funds and authorize the transaction.

To fully grasp the concept of multisignatures, let’s first delve into single signatures. In a single signature cryptocurrency wallet, only one signature is needed to sign a transaction, making it relatively simple. However, a multisignature wallet requires multiple signatures to complete a transaction.

A multisignature wallet is a shared wallet among two or more users, referred to as co-payers. Depending on the type of wallet, the number of signatures required to sign a transaction is usually equal to or less than the number of co-payers.

Within a multisignature wallet, all co-payers have access to the funds and transaction history. To send funds from the wallet, one or more co-payers must sign the transaction, providing an extra layer of security. Additionally, each co-payer has a unique recovery phrase. However, if one recovery phrase is lost, there may not be enough co-payers available to sign a transaction, resulting in the inability to access the wallet’s funds. While this enhances security, it also introduces a higher level of associated risk.

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Author

Coincu

Glossary

Multisignature

Understanding Multisignature: A Comprehensive Guide

When it comes to transferring funds from your wallet, the creation and signing of a transaction play a crucial role. By digitally signing the transaction, you confirm your ownership of the funds and authorize the transaction.

To fully grasp the concept of multisignatures, let’s first delve into single signatures. In a single signature cryptocurrency wallet, only one signature is needed to sign a transaction, making it relatively simple. However, a multisignature wallet requires multiple signatures to complete a transaction.

A multisignature wallet is a shared wallet among two or more users, referred to as co-payers. Depending on the type of wallet, the number of signatures required to sign a transaction is usually equal to or less than the number of co-payers.

Within a multisignature wallet, all co-payers have access to the funds and transaction history. To send funds from the wallet, one or more co-payers must sign the transaction, providing an extra layer of security. Additionally, each co-payer has a unique recovery phrase. However, if one recovery phrase is lost, there may not be enough co-payers available to sign a transaction, resulting in the inability to access the wallet’s funds. While this enhances security, it also introduces a higher level of associated risk.

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